June 06, 2011

By now most of us have a rough understanding of Moore's Law and the exponentially increase in the processing power of technology:

While this increase in technical productivity has been celebrated liberally over the years and has generated huge amonts of value and wealth, it has changed the cost structure of businesses in ways that put increasing amonts of stress on people. Unfortunately human cranial capacity does not evolve quite so fast - changing over millions of years, not hundreds:

What does that have to do with social media? Well, networked communication channels have existed for quite a while but there usage was limited - IRC chats were typically frequented by the more technically inclined, for example. But as organizations have applied technology and their operational speed has increased, humans - not technology & tools - became the biggest limitation to innovation and productivity. With that change, individuals have become more and more stressed because their processing capacity has not evolved. My hypothesis is that social media took off when it did in large part due to the strain being put on individuals to keep up with the pace of technological change. Social media has created an immense improvement in the speed of which individuals can share information and make decisions. This is great as it reduces some of the stress on the individuals in the system.

The problem? Technical processing power will continue to increase and once everyone is social tool-enabled they will end up in the same spot where they were before - as the biggest limitation to operational speed. What then? Humans cannot go faster and faster without breaking the quality of their decision-making and judgement. So while social communications channels will persist, their value to the organizational system will plateau. For those most connected now, they are the canaries in the coal mines - completely overwhelmed by the amount of information coming at them from a myriad of communication channels.

This leads me to the conclusion that a strategy of faster will no longer be effective and, in fact, it will eventually lead you to crash and burn. What humans need and what will give an organizational competitive differentiation is the time and space to build quality products and services that are rewarded with higher margins. The way to acheive that time and space for people to do their best work is through highly trusting relationships with customers - and it is the only way. Customers must trust that by giving your company time to build a quality product or effectively support them, they will be better served.

That has some pretty broad implications. It means that to win, organizations will have to:

Focus on building relationships first, rather than focus on the products and services first

Educate and expose customers on internal processes so they understand and have realistic expectations of delivery

Build in boundaries that allow individuals to slow down and focus

Build trusted relationships with employees such that they not only don't feel pressure to go faster but are incented to make sure they are thorough and inclusive in their work

Communities are one of the few ways to scale some aspects of relationship development and building. Those companies who are ready for this next phase of operational effectiveness are busy investing in relationships today and not worrying quite as much about the short term ROI. Those organizations too focused on the short term, transactional ROI of social media may find that they missed the boat as social media effectiveness flattens because their customers and prospects are off building deep, rich relationships elsewhere and, at the end of the day, those customers and prospects only have room for a limited number of those relationships.

It's time to fundamentally rethink how value is assessed, created and distributed and how we think about our competitive landscape.

Want to hear more about this from me? I'll be presenting these and other thoughts at the Enterprise 2.0 Conference on Tuesday, June 21st in Boston.

What do you think? Are you personally feeling stressed? Do you think your organization wants to keep its foot on the gas to the exclusion of quality? Which companies have always done this relationship piece well and have they prospered?